May To Sell Venture Stores In Discount Exit

June 28, 1989|By Wilma Randle.

May Department Stores Co. said Tuesday it will sell its Venture and Caldor subsidiaries and get out of the discount store business.

Company Chairman David C. Farrell said leaving the discount store business will allow the St. Louis-based firm to concentrate on its 14 department store companies, which include May Co., Hecht, Lord & Taylor, Famous-Barr, Filene`s, Foleys, and also its Payless Shoes self-service shoe chain.

Proceeds from the sale of Venture and Caldor will be used to buy company stock and expand its department and specialty shoe store divisions, he said.

One analyst said the two discount store chains should attract a number of bidders and fetch a sale price of about $1.5 billion.

The company operates 73 Venture stores in seven states in the Midwest, including 33 in the Chicago area. Venture last year closed stores in Deerfield and Ford City. There are 120 Caldor stores in eight Northeastern states.

Caldor had sales last year of $1.6 billion, while Venture had sales of $1.3 billion.

The two companies employ a total of 29,000 workers, including 14,000 at Venture stores. May officials said one of the conditions of the sale will be

``appropriate`` compensation for employees.

Financial analysts familiar with May were not surprised by plans for the sale. But there was some speculation that the retailer might be making the move to block an unwanted takeover attempt.

A company spokesman said this was not true.

``May hasn`t done well in the discount business. Their real strength is in the department store business,`` said N. Richard Nelson Jr., a retail analyst at Duff & Phelps in Chicago.

``They are both upscale discount stores. What has been lacking has been the execution of merchandising and operating strategies. It`s a management issue rather than location issue.``

Two retailers expected to bid on the divisions are the Target stores of Minneapolis-based Dayton Hudson Corp. and Troy, Mich.-based K mart Corp.

``From a geographical standpoint, this is a match made in heaven for Target,`` said Nelson. ``The only overlap would be in the St. Louis market where both have stores. K mart is not well represented in the Northeast.``